Businesses Operating in Japan
How do Japanese businesses comply with the qualified invoice system?
Japan's Qualified Invoice-Based Tax System (Tekikaku Seikyusho) took effect October 2023. Suppliers must register with the NTA to issue qualified invoices. Qualified invoices include the supplier's registration number, applicable tax rates, consumption tax amounts per rate, and other required information. Buyers can only claim input tax credits for purchases supported by qualified invoices from registered suppliers.
What must a Japanese qualified invoice contain?
A qualified invoice under Japan's Tekikaku Seikyusho system must include:
- Registration number: The supplier's T-number (13-digit registration number) issued by NTA
- Date: Invoice issue date
- Recipient identification: Name of the buyer or sufficient identification
- Transaction description: Description of the goods or services supplied
- Tax-excluded or tax-included amounts: Amounts per applicable JCT rate (standard 10% or reduced 8%)
- JCT amounts: Consumption tax amounts per rate shown separately
- Total amount: Total invoice value
Frequently Asked Questions
- What are the two JCT rates in Japan and which goods use the reduced rate?
- Japan's consumption tax (JCT) has two rates: the standard rate of 10 percent and a reduced rate of 8 percent. The 8 percent reduced rate applies to food and beverages (excluding alcohol and eating-in at restaurants) and newspaper subscriptions (twice-weekly delivery). All other supplies are subject to the standard 10 percent rate. This dual-rate system was a key driver for the qualified invoice system, as input tax credits now require separate identification of supplies by rate.
- What happens if a Japanese buyer receives an invoice from a non-registered supplier?
- Buyers receiving invoices from suppliers who have not registered in the qualified invoice system cannot claim full input JCT credits. During a transition period (until September 2026), buyers can claim 80 percent of the input tax on purchases from non-registered suppliers; from October 2026-September 2029, 50 percent; after October 2029, no credit is available. This structure provides strong incentive for all suppliers to register, as non-registration makes their prices effectively more expensive to VAT-registered buyers.